MoneyAfrica| Investment Research
Weekly Market Commentary
August 11, 2025.
Good morning, readers, and welcome to this week’s edition of our stock market newsletter!
As always, our newsletter is divided into two sections: Green White Green, covering the Nigerian stock market, and the Star-Spangled Banner, focusing on the US market.
Green White Green Recap
Macro Update
Nigeria’s capital importation jumps 67% to $5.64 Billion in Q1 2025, Boosted by Portfolio Investments
Nigeria’s capital inflows surged by 67.1% year-on-year to $5.64 billion in Q1 2025, up from $3.38 billion in Q1 2024, and 10.9% higher than Q4 2024 ($5.09 billion), according to the National Bureau of Statistics.
Portfolio investment dominated, accounting for 92.3% ($5.2 billion), the highest quarterly capital inflow recorded since Q1 2020, while FDI remained low at $126.3 million (2.2%).
The banking sector led with $3.13 billion (55.4%), followed by financing ($2.1 billion) and manufacturing ($129.9 million).
Key Takeaways:
- Short-Term Capital Dominates: The surge in portfolio investment signals strong short-term interest but also indicates volatility risk, as such funds can exit quickly during instability.
- Structural Gaps Remain: Persistently low FDI highlights underlying issues in the business environment; long-term investors should factor in regulatory, infrastructural and policy risks.
FX Update
Naira Exchange Rate Performance
Between August 1 and August 8, 2025, the Nigerian naira’s performance was mixed. In the official market, the naira appreciated slightly by 0.06%, strengthening from ₦1,533.74 to ₦1,534.29 per US dollar. Conversely, in the parallel market, it depreciated by 1.30% from ₦1,540 to ₦1,560 per dollar.
Nigeria’s external reserves increased from $39.266 billion as of August 1, 2025, to $40.159 billion August 7, 2025—the highest since January 20, 2025.
Key Takeaway:
- The gap between the official and parallel exchange rates grew from ₦6.26 in August 1, 2025 to ₦25.27 August—a ₦19.45 increase, underscoring ongoing market distortions and the need for investors to watch for FX policy changes that could impact pricing.
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Equities Update:
NGX Ends Week Strong, Led by Industrial Goods Outlier Performance
The NGX All-Share Index rose by 3.18% for the week ending August 8, 2025, bringing the year-to-date return to 41.61%.
Industrial Goods: The sector led this rally with a substantial 8.73% gain, driven by renewed interest in large-cap stocks, particularly in cement and building materials stocks. Notably, BUA Cement jumped by 13.92% and Dangote Cement rose by 9.22%, supported by expectations of higher infrastructure spending.
Consumer Goods: Also saw significant momentum, rising by 8.27%. Investor appetite was strong for key FMCG companies following improved half-year earnings and optimism around consumer demand recovery.
Oil and Gas: The sector recorded a marginal gain of 0.17%, reflecting cautious sentiment despite stable oil prices.
Banking: In contrast, the Banking sector fell by 0.75%, likely reflecting investor reactions to earlier mixed earnings results.
Key Takeaway:
- The NGX gained 3.18% this week, bringing YTD returns to 41.61%, led by strong rallies in Industrial and Consumer Goods. Oil and Gas remained flat, while Banking declined due to earnings and regulatory concerns. Investors should focus on growth sectors but stay cautious with underperforming ones.
Fixed Income Update
Mixed Trend in the Money Market
Last week, Nigeria’s treasury bills market saw mixed movements across maturities in the secondary market. The 91-day bill yield edged down slightly from 17.11% to 17.10% as investors sought short-term, low-risk instruments they could easily liquidate. In contrast, the 182-day yield rose from 17.97% to 18.46% as demand for mid-tenor paper softened, with many investors either staying at the short end or extending to capture higher long-term yields. The most significant shift came from the 364-day bill, where yields surged from 18.61% to 19.53%, reflecting heightened inflation expectations, and uncertainty over future monetary policy.
In the primary market, the Central Bank of Nigeria (CBN), through the Debt Management Office (DMO), conducted a treasury bill auction on Wednesday, offering ₦220 billion across the 91-day, 182-day, and 364-day tenors. The stop rate on the 364-day paper was set at 16.50%, notably below prevailing secondary market levels, as strong bidding led to an oversubscribed auction, with particularly robust interest in the longer-dated instrument.
Bond yields climbed to an average of 16.21% from 16.28%.
Key Takeaway:
- Investors should note the mixed trends in the money market, with short-term treasury yields fluctuating and a sharp drop in the 364-day bill suggesting easing government borrowing, while bond yields remain relatively stable, signaling steady long-term expectations.
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For long-term goals, naira-denominated fixed income instruments are not suitable due to inflation and currency risks .
Star-Spangled Banner Recap
Rising Yields, Tariff Tensions, and Market Caution
US treasury yields rose on Friday as investors assessed the inflationary impact of new tariffs. The 2-year, 10-year, and 30-year yields climbed to 3.76%, 4.29%, and 4.86%, respectively, amid concerns about growth and Fed policy direction. Meanwhile, President Trump’s sweeping tariffs and his nomination of Fed critic, Stephen Miran, to the Board of Governors raised speculation about potential political influence on future monetary policy.
Markets reacted cautiously. In the week ending August 8, 2025,
the S&P 500 increased by 1.88% (YTD: +8.86%),
the FTSE 100 increased by 0.30% (YTD: +10.12%),
the Nikkei 225 increased by 4.24% (YTD: +6.39%),
and the CAC 40 decreased by 2.11% (YTD: +4.72%).
The MSCI World Index increased by 2.52%, pushing its YTD to 11.22%.
Key Takeaway:
- The increase in US treasury yields signals market expectations of higher inflation and potential Fed policy tightening, which could impact borrowing costs and equity valuations, while most major indices posted gains, mixed performance—especially in Europe—suggests investors are treading carefully amid trade policy uncertainty and shifting economic signals. Diversification remains key.
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We hope you find this edition insightful, and as always, stay focused on your financial goals!